How Do Esports Sponsors Make Money?

Esports sponsorships are a big business, with companies spending millions of dollars to back teams and players. But how do these deals work? How do esports sponsors make money?

Introduction

Esports sponsorships are a key part of the revenue puzzle for esports organizations, players, and event organizers. But how do these sponsorships work? How do companies justify spending millions of dollars on sponsoring an esports team or player?

In this article, we’ll take a look at how esports sponsorships work and how companies make money from them. We’ll also touch on some of the challenges that sponsors face when trying to reach esports fans.

As the popularity of esports has grown in recent years, so too has the amount of money that companies are willing to spend on sponsoring teams and players. In 2018, global spending on esports sponsorships was estimated to be $865 million USD, and it is expected to grow to $1.65 billion USD by 2022.1

Much like traditional sports, there are a number of different ways that companies can sponsor an esports team or player. The most common type of sponsorship is through direct payment to the team or player, which can be used to help cover expenses like tournament fees, travel costs, and player salaries. Some companies also provide in-kind sponsorships, which can take the form of product discounts or free goods.

In exchange for their sponsorship dollars, companies typically receive a number of benefits. These can include branding opportunities (e.g., having their logo displayed on a team’s jerseys), access to exclusive content (e.g., behind-the-scenes footage), and activations at events (e.g., setting up a booth where fans can interact with products).

One of the challenges that sponsors face is finding effective ways to reach esports fans. Unlike traditional sports fans, who are relatively easy to reach through traditional channels like TV and radio, esports fans are often harder to reach because they consume content primarily online. This has led some companies to invest in custom marketing solutions that are specifically designed for the esports audience.

Despite the challenges involved in sponsoring an esports team or player, there are a number of benefits that make it an attractive proposition for companies. These include potential access to a young and affluent demographic, as well as the opportunity to align with a rapidly growing industry.with a bright future ahead!

The Different Types of Esports Sponsors

There are four main types of esports sponsors: 1. Endemic sponsors 2. Non-endemic sponsors 3. Tournament sponsors 4. Event sponsors. Endemic sponsors are companies that make products or services for gamers and the gaming industry, such as Logitech or Razer. Non-endemic sponsors are companies that are not in the gaming industry but see the value in sponsoring gamers and esports teams, such as Coca-Cola or Ford. Tournament sponsors are companies that sponsor specific esports tournaments, such as Intel Extreme Masters or The International. Event sponsors are companies that sponsor gaming events, such as PAX or Gamescom.

Advertisers

The most common sponsors of esports athletes and teams are advertisers who want to reach the large and engaged esports audience. Because esports fans are young, male, and digitally savvy, they are an attractive target for advertisers.

Advertisers can sponsor specific esports events, teams, or athletes. They can also buy advertising that appears in the digital and physical spaces where esports are watched, such as on the Twitch streaming platform or at live events.

Advertisers sponsor esports to build brand awareness and engage with potential customers. For example, a company that makes energy drinks might sponsor an esports team in order to appeal to young consumers who are into gaming.

Endorsement Deals

An endorsement deal is when a company pays an athlete to use their product. The athlete will often be photographed using the product, or they may mention the product in an interview. In return for the endorsement, the athlete will receive a lump sum of money or a percentage of sales.

Product placement is similar to an endorsement deal, but instead of paying the athlete, the company will provide their product for free. The company will then hope that by association, viewers will want to buy their product.

In-game sponsorships are becoming more common in esports as games continue to evolve. In-game sponsorships are when a company’s logo is placed within the game itself. It’s similar to seeing Coca-Cola ads in NBA 2K or Gatorade ads in Madden NFL. For games that don’t have commercial breaks like CS:GO, this can be very valuable real estate for brands looking to get their foot in the door with esports fans.

Tournament Organizers

Tournament organizers, such as Major League Gaming, ESL, and Dream Hack, host and broadcast esports competitions. These brands make money from sponsorships, ticket sales,advertorials, and merchandise. In some cases, the tournaments are organized by game publishers who see it as a marketing investment — a way to generate interest in their games.

Streaming Services

In recent years, streaming services have become increasingly interested in sponsoring esports events and teams. This is likely due to the fact that esports fans are typically young and affluent, and are therefore an attractive target demographic for these companies.

The most well-known streaming service sponsor is Twitch, which has sponsored numerous events and teams over the years. Other streaming service sponsors include Caffeine, Hitbox, and YouTube Gaming.

How Do Esports Sponsors Make Money?

Esports sponsorships are a huge and growing industry, with sponsorships reaching $1.5 billion in 2019. But how do esports sponsors make money? Let’s take a look at the ways esports sponsorships work and how they make money.

Advertisers

Esports sponsorships are becoming more and more commonplace as the industry continues to grow. But how do these sponsorships work? How do esports sponsors make money?

Advertising is the most common form of esports sponsorship. Sponsors will often take out ads on livestreams or during events. This allows them to reach a large audience of potential customers who are already interested in esports.

Another way that advertisers can reach the esports audience is through product placement. This is when a sponsor’s product is featured in the game itself or in other aspects of the tournament, such as on stage or in the broadcast. This can be a great way to reach gamers who may not be watching the ads during the event.

Lastly, sponsors can also make money by selling branded merchandise. This can include things like t-shirts, hats, and other clothing items that feature the sponsor’s logo. This is a great way for fans to show their support for their favorite teams and players while also giving sponsors another avenue to generate revenue.

Endorsement Deals

The most common way that sponsors make money from esports is through endorsement deals with players and teams. In these arrangements, sponsors provide financial support to players and teams in exchange for the use of their brand name or logo on team jerseys, equipment, or other merchandise.

In some cases, endorsement deals also give sponsors the right to use player or team names and logos in advertising and marketing campaigns. These campaigns can be a powerful way to reach esports fans, who are often young and tech-savvy consumers with disposable income.

Endorsement deals are similar to the sponsorship arrangements that are common in traditional sports such as football, baseball, and basketball. However, there are a few key differences that make esports sponsorship deals more attractive to brands.

For one thing, esports fans are more engaged than fans of traditional sports, with 78% of them watching live streams of gaming events at least once a week. This high level of engagement provides more opportunities for sponsors to reach their target audience.

In addition, esports offers sponsors more opportunities to integrate their brands into the game itself. For example, some brands have sponsored virtual “skins” that players can use to customize their characters’ appearance in popular games such as Fortnite and League of Legends.

Finally, the global reach of esports provides brands with an opportunity toBuild relationships with players and teams in emerging markets such as China and India specifically those who have not yet been reached by traditional sports sponsorship.

Tournament Organizers

Event or tournament organizers are a key source of revenue for esports. These organizers charge participants a fee to join and also take a cut of any prize money that is up for grabs. In return, they cover the cost of hosting the event and also provide essential infrastructure, such as servers, referees, and commentators.

Many esports tournaments are organized by game publishers themselves. For example, Blizzard organizes the Overwatch World Cup, while Riot Games runs the League of Legends World Championship. Other third-party tournament organizers include Electronic Sports League (ESL) and Major League Gaming (MLG).

Tournament organizers typically generate revenue from three main sources: entry fees, sponsorship, and broadcasting rights. Entry fees are charged to teams in order to participate in a tournament. These fees go towards covering the costs of hosting the event, such as renting out a venue, hiring staff, and setting up equipment.

Sponsorship is another key source of income for tournament organizers. Companies looking to gain exposure in the esports industry will often sponsor teams or events in order to reach the target demographic of gamers. In return for their sponsorship, these companies usually receive branding opportunities at the event, such as having their logo displayed on team jerseys or around the venue.

Finally, broadcasting rights are another important source of revenue for tournament organizers. Esports tournaments are often streamed live online, giving viewers from all around the world the chance to watch their favorite teams and players compete. Tournament organizers sell these broadcasting rights to streaming platforms like Twitch or YouTube Gaming in order to generate additional income.

Streaming Services

Many companies are now partnering with esports organizations to help them reach a wider audience. These companies typically become sponsors, and in exchange, they receive a certain amount of advertising space. The most common way that sponsorships work is by having the company’s logo displayed on the team’s jersey or on their gaming equipment.

In some cases, the sponsorship might also include a section on the team’s website where the sponsor can place ads or promote their products. Some sponsorships will also give the company access to exclusive content, such as behind-the-scenes footage or interviews with players.

Streaming services are one of the most popular types of esports sponsorships. This is because many esports fans prefer to watch matches through these services, rather than purchasing tickets to live events. Twitch is one of the most popular streaming platforms for esports, and it has partnerships with many different teams and players.

As a result of these partnerships, Twitch is able to offer its viewers exclusive content that they cannot find anywhere else. In addition to this, Twitch also allows sponsors to place ads on its platform. These ads are then seen by millions of people who use the service, which helps the sponsor to reach a large audience.

Conclusion

So in conclusion, how do esports sponsors make money? By aligning themselves with gaming celebrities, partnering with endemic and non-endemic brands, and through a variety of marketing and advertising activities.

With the global gaming market expected to generate $196 billion in revenue by 2022, there’s plenty of money to go around for esports sponsors. And as the industry continues to grow, we can only expect that sponsors will continue to innovate and find new ways to cash in on the esports phenomenon.